Ministry of Overseas Development

A Guide to Transport Planning

within the Roads Sector:
for Developing Countries

By D I N Bovill, I G Heggie and J L Hine

Lonaon: Her Majesty's Statione~/Office

£1.50 net
Ministry of Overseas Development

A Guide to Transport Planning

within the Roads Sector:
for Developing Countries

By D I N Bovill, I G Heggie and J L Hine

London: Her Majesty's Stationery Office

Preface

This document is addressed to senior administrators in government, responsible for

the administration of road planning and for the operation of road transport in
developing countries. It is not a manual setting out procedures for efficient trans-
port policy, nor is it an instruction manual of methods of project appraisal.

The purpose of the document is as a guide to effective decision making. It should

be used when changes in transport policy or legislation are envisaged, when terms
of reference for investment studies are being considered or when assessments are
made of feasibility studies within the road sector.

The authors would like to t~ank Mr S Thomas for his contributions to Chapter 6.

A one-day seminar was held in the ODM to discuss the booklet, which was
attended by a selected group of people with considerable experience in road sector
planning in developing countries. Whilst not necessarily endorsing everything in
detail in the text, they are in general agreement with it and consider that it should
make a valuable contribution to road planning in developing countries. The seminar
was attended by the following people:
Professor K M Gwilliam, Institute for Transport Studies, University of Leeds
M r Brian Martin, Managing Director, Martin and Voorhees Associates
M r Jim Tresidder, Managing Director, Halcrow Fox and Associates
M r Michael West, Managing Director, The Economist Intelligence Unit
M r T i m Powell, Coopers and Lybrand Associates Limited
M r TonySpottiswoode,T P O'Sullivan and Partners

iii
Contents

Page
1 Planning the Road Sector 1
1.1 Introduction 1
1.2 Administration of the Road Sector 2
1.3 Transport Policy 3
1.4 The Long Term Strategy Plan 3
1.5 The Road Investment Budget 4
1.6 Freight and Passenger Transport 4
1.7 NationaITransport Studies 5

2 General and Specific Objectives of the Sector 7

2.1 Introduction 7
2.2 The Need for Precision in Objective Setting 7
2.3 Economic Objectives 8
2.3.1 Increasing the Consumption and Production of Goodsand Services 8
2.3.2 Distribution of Consumption Between Groups 8
2.3.3 Distribution Over Time 9
2.4 Socialand Political Objectives 9
2.5 Comments 9

3 Resources and Constraints 10

3.1 Introduction 10
3.2 ResourcePlanning 10
3.2.1 Physical Resources 10
3.2.2 Financial Resources 11
3.3 Ownership 11
3.4 Allocation 11
3.5 Constraints on Resource Use 12
3.5.1 Statutorily Enforced Regulations 12
3.5.2 Standard Codes of Engineering Practice 12
3.5.3 Government Directives 12
3.5.40rganisational and Institutional Constraints 12
3.5.5 Cultural Constraints 13
3.5.6 Comments 13

4 The Management and Control of Road Transport 14

4.1 Introduction 14
4.2 import Duties and Controls 14
4.3 Vehicle and Fuel Taxes 15
4.4 Licensing 15
4.5 PriceControls 16
4.6 Subsidies 17
4,7 Highway Regulation and Policing 17
4.8 Investment Policy 18
4.9 Control of Public Enterprises 18

5 The Identification of Road Investment Alternatives 19

5.1 introduction 19
5.2 Improvement in Overall Transport Policy and Management 20
5.3 The Improvement of the Rural Road Network 20
5.3.1 Identification of Projects for Detailed Study 20
 Page
5.3.2 Design Standards 21
5.3.3 Maintenance 24
5.3.4 Choice of Construction Methods 24
5.4 The Improvement of the Inter-Urban Road Network 25
5.4.1 The Identification of Projects for Detailed Study 26
5.4.2 Design Standards 26
5.4.3 Maintenance 29
5.4.4 Choice of Construction Methods 29
5.5 The Improvement of Urban Transport 3O
5.5.1 Land Use Transportation Planning 30
5.5.2 Traffic Management 31

6 Framework for Project Appraisal 33

6.1 Introduction 33
6.1.1 Rural Roads 33
6.1.2 Inter-Urban Roads 34
6.1.3 Urban Roads 34
6.2 The Effects of the Proposed Investment 35
6.3 The Estimation of the Net Benefits from Changesto the Road Sector 36
6.3.1 Comparability and Measurability 36
6.3.2 Double Counting 36
6.3.3 Interdependence 36
6.3.4 Net Benefits 37
6.3.5 Social rather than Individual Costs and Benefits 37
6.3.6 Risk and Uncertainty 38
6.4 Comparison of Cost and Benefits 38

7 Bibliography 40

vi
1 Planning the road sector

1.1 Introduction
Road transport is an important component of economic activity in nearly all devel-
oping countries. For most countries it accounts for over 10 per cent of the total import
bill and in recent years, road investment itself has often accounted for over 10
per cent of public investment expenditure.

Roads are the most important means of internal transport. In expenditure terms
and coverage it is much more important than other forms of land transport. Devel-
oping countries as a whole, have in the order of 16 times more route miles of road
than railways and about 7 times more trucks and buses than railway wagons and
carriages. Although there is considerable variation between countries, the statistics
clearly demonstrate the importance of efficient planning of the road sector.

The interaction between transport investment and development is complex and the
subject of much dispute. Many have argued that the provision of transport facilities
can act as a catalyst to the development process, whilst others contend that
traespor~ is just one of a number of inputs that need to be present to stimulate
development. The latter argument, which is gaining weight, suggests that the pro-
vision of roads has only a supportive role in the development process. However
true these arguments are, it is important that effective rational planning criteria are
used by governments to plan their road sector.

The purpose of this chapter is to place road transport and road investment within
the context of national transport policy. It considers government administration of
the sector and discusses the need for a comprehensive transport policy document.

1.2 Administration ofthe Road Sector

There is often considerable division of responsibility between Ministries for plan-
ning transport. Within the road sector there is frequently a division of responsibility
between the licensing and control of road transport and read investment. Highway
planning itself is often a joint responsibility of the Ministry of Public Works and the
Ministry of Economic Planning. Whatever structure is followed, effective coordi-
nation between all those concerned with planning the sector is extremely import-
ant.

The structure of ministerial responsibility and the deployment of high level adminis-
trative and technical manpower should reflect the government's overall priorities.
This document should help to indicate what the priority areas within the road sector
are. This should go some way in helping to suggest how administrative resources
should be deployed.

There is growing recognition that active government involvement should not be

confined to major infrastructure developments. In recent years much more interest
has been expressed in rural road planning, urban traffic management and the oper-
ations of passenger and freight transport. In view of the enormously greater
resources which go into vehicle operations, compared with infrastructure invest-
ment such a change in emphasis is not premature.

Many developing countries do not have a Ministry of Transport or its equivalent

body that can take an overall view of the planning of transport. The efficiency of the
road transport industry can easily suffer if insufficient attention is paid to the
industry's problems at a high enough level within government.
A long term view must be taken of the road transport industry which cannot
properly be left to the Road Traffic Commissioner's Office, the police, or the
customs and tax departments, although all these bodies have a part to play in the
efficient day to day administration of the industry. Chapter 4 considers how a long
term view may be taken of the way in which government policy can affect the road
transport industry.

The allocation of responsibility for the road sector within the government structure
must be met by a corresponding allocation of suitably qualified staff. Economists,
civil engineers, traffic engineers, statisticians, accountants and people experienced
in operating freight and passenger bus operations represent the sorts of technical
skills most required for the efficient administration of the sector.

Often a developing country must seek outside help to fill posts within its admin-
istrative structure. Although the day to day demands of a technical co-operation
officer's job may hinder training, it should always be remembered that the long
term objectives of all technical assistance and training should be to ensure that in
time an indigenous transport planning capacity is built up within the country.

Besides the recruitment of technical co-operation staff, advice on a specific

problem can also be gained from externally recruited consultants. Where indigen-
ous high level technical and administrative skills are very scarce, then it is wise to
use this resource as carefully as possible. It is most important to know when and
where to bring in outside help and also to know how to act critically on outside
advice. The temptation for high level locally employed staff to get involved in doing
time consuming detailed work on minor problems should be avoided.

The consultant's report should not be an excuse to postpone decision making. Too
often consultants are asked to look into a problem which has been studied many
times before. If this happens, then it is possible that help with implementation may
be more beneficial than further arms-length advice.

Often there is too much of a gap between implementation and the initial feasibility
study. To avoid this, consultants should be told what is administratively and politi-
cally realistic before they start and the amount of funds and other resources likely
to be made available to implement their proposals. Furthermore, administrators
should be clear as early as possible, on what kinds of proposals will be forthcoming
from consultants so they can be prepared for what might be needed for implemen-
tation.

Physical and financial resources must be planned alongside administrative

resources and Chapter 3 considers how this might be done within the road sector.

1.3 Transport Policy

The road transport sector cannot be properly planned without reference to overall
government transport policy. For effective planning, the government needs to take
a comprehensive view of the whole transport sector. Road investment policy and
road transport legislation should both be designed to meet the specified objectives
of government transport policy, which in turn should be formulated to cover the
wider social and economic goals of overall government policy.

These government policies should be published in the form of a Transport Policy

Document which should set out how the government wishes the total transport
system to develop in the longer term. This should include in broad outline, the
priorities for transport investments. Chapter 2 outlines how objectives for the
sector may be formulated and specified both for the policy document and for
specific transport schemes.

It is important that the document should be distributed as widely as possible. This

will help reduce the level of uncertainty to a minimum for all those who must make
decisions of a Iocational nature or decisions about the most suitable form of trans-
port to meet their requirements. For example, if the Government intends within the
next few years, to run down and abandon the railways then it is important to these
firms and organisations which currently rely on the railways, to plan for alternative
transport to carry their products. Likewise if the Government intends, in due
course, to develop a new port then a firm which could take advantage of this
facility would be able to plan the location and timing of its investments in co-
ordination with government plans.

A high level of uncertainty about the future development of transport policy can
have a serious effect on the economic development of a count~. Because trans-
port is so pervasive, the detrimental effects following from uncertainty may be
much greater than a simple examination of transport costs might suggest.

The Transport Policy Document should include a brief inventory of the existing
transport infrastructure including ports, roads, railways, airfields and a statement of
investment in vehicles, rolling stock, planes, ships etc. These data, coupled with a
statistical analysis of the expected growth of different sections of the economy and
compared with data from other countries, can provide an indication of where future
investment in the transport system is most needed.

Major bottlenecks and deficiencies in the transport system should also be men-
tioned. For example, a shortage of port capacity may hinder a country's export
efforts, a shortage of railway wagons or road freight vehicles may be the principal
constraint on commodity production; likewise a long slow circuitous route may
prevent the proper development of substantial inland resources. Any new invest-
ments in the non-transport sector should also be stated so that transport planners
can ensure that these new developments have adequate transport links at the time
they are required.

These measures will provide a good overall impression of where investment is

most required in the transport sector and at the same time will provide a proper
basis for the evaluation of individual transport projects in detail.

An analysis of the national transport system may indicate serious inefficiencies in

the utilisation of transport capacity. Such inefficiencies may have a variety of
causes: unnecessary government regulations, an inefficient pricing system, over
investment in transport infrastructure, an entrenched monopolistic operator or a
lack of trained management could all be important constraints in this respect. The
Transport Policy Document should provide a statement by the government on the
policies it intends to follow to improve the situation.

1.4 The Long Term Strategy Plan

As part of the Transport Policy Document, a Long Term Strategy Plan for the future
national road network should be formulated. The plan should show how, in the long
term the road network will develop. It should outline the major inter-urban roads to
be built including any commitments on international highways. An indication should
also be given of how the rural and urban road networks are expected to change.

The inter-urban road network should be clearly designed to complement the future
rail and water networks. It should also accommodate sea port and air port develop-
ments as well as any mining and industrial developments or major regional or urban
development schemes.

Not all roads in the strategy plan will be capable of immediate economic justifi-
cation. However, in the longer term the routes chosen should be capable of being
economically viable in relation to the planned growth of traffic, In broad terms, the
strategy plan should be designed to fit in with the lowest cost long term solution
(taking account of level of service, infrastructure costs, maintenance costs and
vehicle running costs) to meet the foreseeable long term transport demands of the
economy.

3
The strategy plan should give some indication as to regions of the country where
major rural road developments are planned and what the total road mileage in each
area is expected to reach by a given date.

Major additions to the urban road network should be itemised with a brief outline
as to which areas are scheduled to have the most significant changes made to their
urban transport network.

The Transport Policy Document, including the Long Term Strategy Plan provides
essential background information on government policy and government
investment intentions which should enable individual feasibility studies to be made.
The feasibility study represents the final appraisal of an investment project. A major
purpose of these studies is to indicate precisely when each new road link should
be built. However satisfactory results cannot be achieved if government
investment intentions towards other connecting road links are uncertain. The waste
of resources that results from duplication and from roads being built before they
are needed, can be avoided if future government intentions can be clearly spelt out
in the Transport Policy Document and the Long Term Strategy Plan.

1.5 The Road Investment Budget

Although both documents are separate and are likely to refer to different time
periods, nevertheless the Road Investment Budget should be compiled in
conjunction with the Transport Policy Document. For each budgeting time period a
road investment and road maintenance budget needs to be compiled to show what
resources are available for each activity. Resources and the constraints on their use
are discussed in Chapter 3.

Implicitly a design choice must be made when a sum of money is allocated to a

particular investment or maintenance intention. Likewise to determine where
resources should be spent, screening criteria must be adopted to select the most
promising investment opportunities throughout the whole country. Both design
choices and screening criteria within the road sector are discussed in detail in
Chapter 5.
The overwhelming proportion of road planning is the direct responsibility of govern-
ments and government agencies. Because of the difficulties of charging for the use
of roads, commercial profitability criteria cannot be used to indicate where and to
what standard roads should be built.

To overcome these drawbacks, social cost benefit analysis (CBA) is used to

appraise investment projects from the point of view of the whole community. Cost
benefit analysis is the principal decision tool of most feasibility studies in the road
sector. A more detailed discussion of the application of the technique is included in
Chapter 6.

Because of the difficulties of identifying all the costs and all the benefits from each
project CBA is not a pedect tool of analysis. Provided the same system of adding
up costs and benefits is used and provided the projects analysed are very similar,
then CBA can provide a very useful way of comparing different projects.

However, when dealing with the problem of the allocation of scarce financial
resources a comparison of cost benefit rates of return for projects in different
sectors is ve~ difficult because of the different spectrum of unquantifiable factors
left out in each analysis. Even within the roads sector CBA is only of limited value.
The question of allocation of resources both between sectors and within the
transport sector are discussed more fully in Chapters 3 and 6.

1.6 Freight and Passenger Transport

The Transport Policy Document should include the government's views on the long
term development of freight and passenger transport. This should contain a
statement on how the relative balance beWveen road, rail, water and air transport is
expected to change in the near and intermediate future.

4
In most developing countries, both road freight and passenger transport have
experienced a fast rate of growth in the last two decades. This has been caused by
a combination of supply and demand factors.

On the supply side, technical progress has caused a relative decline in the costs of
vehicle transport, in addition there has been a substantial increase in the length and
quality of the road network.

On the demand side, economic change within developing countries has tended to
favour road transport. The growing demand for high value products naturally
favours distribution by road transport. Similarly urbanisation encourages the growth
of road passenger transport.

The switch in traffic from rail to road has also been a contributory factor (along with
poor management, low investment and restrictive pricing policies) in causing many
railways to experience financial difficulties. To counteract the drift of traffic away
from rail, restrictions have often been placed on road traffic. It is doubtful whether
such restrictions are in the long term interests of the country. This is because
restrictions tend to cause only minor diversions from road to rail at the cost of
considerable inefficiency to road transport.

A more sensible approach is to try to shape the rail network to do the job it can do
best and ensure that its pricing structure is organised on a realistic basis. Railways
have an obvious advantage in large-scale long distance bulk movement, whilst road
transport has the advantage of flexibility which can be put to the best use in the
small-scale movement of passengers and goods over shorter distances. Consider-
able savings in rail costs can be achieved by reducing duplication in track mileage,
cutting out poorly used branch lines and by cutting down the amount of small scale
handling of high value products which are best taken by road. Some additional
investment in signalling and other facilities may be needed to achieve economies.

Frequently governments have been reluctant to allow fare increases for passenger
train services to keep in step with general inflation and occasionally they have even
been unwilling to enforce payment of passenger fares. As a result, rail freight traffic
has often had to bear a disproportionate amount of railway costs.

Private cars provide the most convenient form of transport for those who place a
high value on the use of their time. However, cars consume a large quantity of
resources and provide transport for a very small percentage of the population. In
urban areas, they are wasteful in the sense that they contribute to congestion
which could be avoided if the same trips were made by public transport. For
reasons of equity and economy many countries have attempted to restrict
passenger car imports and usage by very high taxation levels.
In urban areas ways should be found to manage private car use and encourage
buses and other forms of public transport to help to avoid the problems of urban
congestion and the possible need for expensive new urban roads.

Government policy on urban bus transport should ensure that the balance between
a safe, regular service with wide coverage is maintained at the same time as a low
priced and competitive operation. Too much control may ensure the former at the
cost of a high priced inefficient operation. Too little control could well mean a poor
safety record and a poor and irregular service in the outer urban areas.

Methods of controlling freight and passenger transport through means of taxation,

licensing and other similar controls, are analysed in greater detail in Chapter 4. The
control of urban transport through traffic management schemes is considered in
Chapter 5.

1.7 National Transport Studies

A number of countries have commissioned national transport studies to identify
investment priorities within the transport sector. These studies can be useful in
drawing up the Long Term Strategy Plan. However, these studies should be
treated with care since they can be expensive, complex, and difficult to interpret.
The national transport study does however give an opportunity to carry out a
national study of transport institutions and infrastructure. This opportunity should
not be wasted.

A large component of the cost of such studies can go into detailed commodity,
vehicle and passenger forecasting and on the allocation of transport demand to
different modes and routes of the transport network. Whilst it is imperative that a
good overall view of transport demand is obtained, nevertheless in practise the
forecasts are inevitably ve~/tentative and dependent on many uncertain assump-
tions and so the use of sophisticated modelling techniques will often be inappro-
priate.

Often the most important and useful part of a national transport study will not be
related to detailed transport forecasting. A study of the institutional and legal
constraints of the road transport industry (an essential component of any worth-
while study) is a good example.

6
2 General and specific objectives
of the sector

2,1 Introduction
It is difficult to prepare and appraise schemes for the improvement and manage-
ment of roads without defining their purpose. The definition of purpose must
furthermore be sufficiently explicit to enable administrators and technicians to
translate them into clear working rules. The individuals responsible for planning
policy - at national, regional and local level - must therefore state, in fairly precise
terms, what contribution they expect any policy or scheme to make towards their
social, economic and political goals.

It can be argued that all objectives pursued by a government are ultimately political.
irrespective of whether this is true or not it is clear that it is no easy task to define
the fundamental objectives of any government and classify them into economic,
political or social terms. Simply we may state that the principal objective of most
governments is to use available resources to achieve maximum benefits. In more
specific terms this reduces to four separate questions:

(a) What is the government trying to achieve (ie what are its objectives)?
(b) What means are available for achieving these objectives (ie what resources are
available)?
(c) Which courses of action would enable the available resources to be mobilised
to realise these objectives (ie the identification of alternative policies and
schemes)?
(d) Which of these mutually incompatible schemes provides the best solution (the
search for an optimum)?

The present chapter is concerned with the first question. The others are dealt with
in Chapters 3, 5 and 6. The following discussion is divided into:
(a) the need for precision in objective setting
(b) economic objectives
(i) increasing consumption and production
(ii) distribution between groups
(iii) distribution over time
(c) social and political objectives

2.2 The need for precision in objective setting

Any statement of objectives must be precise if it is to be of any value as an instru-
ment for planning and management. Objectives not only guide future action by
indicating ways in which resources might be mobilised; they also provide the basic
measure of performance against which past and present actions are evaluated.
They must therefore be precise. Vague statements which refer to 'maximising
satisfaction' or even to 'minimising cost' cannot lead to firm action.

Within transpor~ planning it is common to find references made to the minimisation

of transport costs as a given objective. This is meaningless unless a given pattern
of transport demand is clearly specified. For example if measures are taken which
will have the effect of reducing the amount of travel (such as the closure of a
bridge or the failure to maintain a road) then total transport costs may well diminish
as fewer journeys are made. In this case a minimum transport cost objective may
be fulfilled but the solution would not meet the underlying purpose behind the
objective.
A clear statement of objectives is usually prepared in several stages. It starts with
the specification of fairly general objectives and then reduces these--in successive
stages--to specific objectives which can be related to particular courses of action
and hence to tangible measures of success or failure.

2.3 Economic Objectives

The aim of economic development is to increase welfare. This is best thought of in
terms of consumption. Welfare, which can be thought of as the sum total of
human satisfaction, is dependent upon:

(a) consumption of goods and services,

(b) the allocation of this consumption between different groups in society,
(c) the distribution of consumption over time (ie consumption versus investment).

The transport sector thus contributes towards the aim of maximising welfare by
helping to increase consumption and by influencing the distribution of consumption
between persons and over time.

2.3.1 IncreasJng the Consumption and Production of Goods and Services

There are two main ways in which transport can contribute to these objectives: by
reducing travel costs and by improving accessibility.

The expenditure of resources decreases when the cost of transport services are
reduced. These savings - comprising resources like fuel, tyres, spare parts, labour,
travel time - can then be translated into added consumption, either as they are or
in some other form (ie individuals can either travel further or can exchange fuel
savings etc for other desired commodities). The objective is thus quite straight-
forward: to reduce the cost of providing a given level of transport service.

Improved accessibility can increase levels of consumption by (a) providing access

to cheaper sources of goods and services or (b) by making resources more mobile
and providing better access to them.

The first type of accessibility is similar to the reduction in travel costs mentioned
above. For example, better access to market places, usually enables people to buy
things more cheaply and thus increase their level of consumption. Limited
mobility - or inaccessible markets - tends to limit market size and thus can give
rise to monopoly (exploitation by a few sellers) and monopsony (exploitation by a
few buyers). Both tend to reduce the level of personal consumption or to redis-
tribute it.

The second type of accessibility/mobility is more direct. Transport improvements

may facilitate the movement of scarce resources - labour, imports, exports, as
well as other goods and services - to the places that need them most. The net
result usually results in more production (ie the same resources are used more
efficiently and thus produce more output). Transport improvements - particularly
new roads - can also provide access to new natural resources. They may thus
provide the means enabling important resources like timber and minerals to be
developed.

In summary, this latter objective achieves increased consumption by increasing the

potential mobility of people (enabling them to shop in the cheapest market place).
and resources (enabling them to be used most productively) while providing new
access to valuable natural resources.

2.3.2 Distribution of Consumption between Groups

This objective relates to the ideal distribution of consumption between individuals
and regions (in cost/benefit analysis; benefits = increased consumption; costs =
reduced consumption). This is generally thought of in the context of income distri-
bution, ie do the rich or the poor benefit and, if so, by how much? Benefits are thus
often classified by income and it is usual to attribute a lower value to a unit benefit
to a rich person as compared to a poor one. Policy makers are nevertheless usually
interested in far more than straightforward transfers between income groups. It is
just as important to know how benefits are distributed between the users and non-
users of any transport scheme (eg car users and pedestrians), bus users and car
users, commercial vehicles and other vehicles, and so on. A distributional objective
should therefore clearly specify the form of classification needed to measure any
distributional effects.

2.3.3 Distribution overtime

One of the most difficult and important objectives relates to the nature of con-
sumption at different points in time. In other words, how much does the govern-
ment think £1 is worth now in relation to £1 in a year's time or at any other point in
time. This is an important concept since it is essential to the evaluation of
(a) different schemes which produce different patterns of consumption over time
and (b) the balance between capital and current expenditure.

The objective is specified as a series of weights, one for each year, describing the
importance the government wishes to attach to the value of any consumption
(benefits and costs) generated in each year. The rate at which these weights
decline defines the discount rate.

2,4 Social and Political Objectives

Most governments persue a number of social objectives which cannot easily be
interpreted in strict economic terms. They are often intangible and are not usually
capable of being expressed in monetary units. The ones usually quoted include:

(a) the preservation of lawand order;

(b) defence against outside aggression;
(c) preservation of the culture;
(d) achieving power and prestige;
(e) contributing towards cultural integration, etc.

Some of these are important and cannot be omitted from a general statement of
objectives. They nevertheless present more problems than the usual economic
one, in that they cannot be translated into specific objectives that relate to tangible
measures of success or failure. How, for example, can preservation of the culture
be measured? Not only is it difficult to define 'culture' in a meaningful way; it is
equally difficult to know how, and in what way, a transport scheme might affect it
in any quantitative sense. These objectives therefore create special problems and
must be very carefully - and specifically - defined to avoid encumbering the
objectives with too many unmanageable goals.

2.5 Comments
The above summary is not intended as a comprehensive review of the range of
objectives that might be adopted. It has simply tried to indicate the general way in
which objectives are formulated. When it comes to the setting of actual objectives,
however, each country and sector must set its own. Detailed objectives are so
intimately dependent on the social, economic and political environment in which
they must operate, that global generalisations are rarely possible. What is certain,
however, is that efficient planning, management and evaluation cannot be done
without these objectives. No matter how vague an objective may be, it usually still
implies the ability to measure, to rank and hence to choose between the good and
the less good.

' 9
3 Resources and constraints

3.1 Introduction
The resources available for carrying out road policies and any constraints on their
use, govern how far and fast a government can go in trying to achieve its stated
objectives in this sector. Obviously, the more resources available, and the greater
the sector's command of these resources, the larger the programme can be.

The following aspects need to be considered in detail:

(a) Resource planning

(i) physical resources
(ii) financial resources
(b) Ownership of resources
(c) Resource allocation
(d) Constraints on resource use.

3.2 Resource Planning

The resource problem is national in scale. Additional resources for use by the road
sector can be obtained from other sectors and vice versa. To achieve the best
utilisation of resources, the needs of each sector must be compared - both
individually and collectively - with a statement of the national resources available.
Resources can be classified into physical and financial resources.

Resources need to be planned in relation to their demands. For the road sector
resources need to be made available for:

(a) new construction of roads and traffic management schemes

(b) road maintenance
(c) planning and administration of road construction and maintenance
(d) policing and road safety
(e) vehicle taxation and licencing
(f) construction and purchase of passenger and freight vehicles
(g) garaging, fuel, spare parts and repairs
(h) manpower and administration for vehicle operations
(i) working capital for vehicle operations
(j) manpower training and education
(k) research relevant to planning, road construction, road maintenance, vehicle
operations and road safety,

3.2.1 Physical Resources

Physical resources represent items such as the men, plant and materials available
to achieve the objectives of the sector. The use of these resources obviously
needs to be carefully planned to achieve the maximum benefit.

Physical resources need to be planned in physical terms as well as in financial and

economic ones.

(i) Physical planning. To estimate the amount of physical resources available or

needed for a particular task. A statement of where and when these resources
will become available is also required. This will indicate not only which
resources might have to be imported but also which schemes need to be
phased to start when other schemes are complete.

10
 (ii) Financial planning. A financial statement of the physical resources is required.
This is needed because transactions and budgetary allocations are invariably
made in financial terms. Hence, for proper budgetary control, a financial
analysis of resource use is needed.
(iii) Economic planning. A statement is required of the economic consequence of
diverting resources to a particular task. The relative economic values will indi-
cate which resources should be substituted for those that are more scarce.

Financial values are not often sufficiently precise to indicate the relative scarcity of
different resources. For example, taxation will usually overvalue some goods,
whilst subsidies will undervalue others. Corrections to financial values must there-
fore be made to obtain economic valuations. The difference between them can be
quite substantial and this makes it desirable to keep two sets of accounts: financial
and economic ones. The first set simply records the flow of funds associated with
any scheme; the second shows the actual flow of resources expressed in real
terms.

3.2.2 Financial Resources

Financial resources represent the money that is available to the road sector to
purchase and operate vehicles and to carry out road construction and maintenance.
Money for road investment will usually come from road user taxation and foreign
loans and grants or from domestic government borrowing. The major source of
revenue for vehicle operations is from fares and tariffs. Investment for private
vehicle operations usually comes from share capital, bank loans or internally
generated funds. Government owned vehicle operations will be able to rely more
on government borrowing for investment funds.

3.3 Ownership
The ownership of resources can be important because it defines the extent to
which the government can mobilise, direct or command the use of the resources.

There are usually two levels at which ownership is important:

(a) Are the resources imported or domestic?

(b) Are they publicly or privately owned?

The structure of ownership at both levels affects the mobilisation of resources in

several ways. The degree of control the government has over any resource is
obviously high if it is domestic in origin and publicly owned; control is least for any
imported resources. For privately owned domestic resources the government can
usually exercise considerable influence by persuasion or regulation.

Another aspect of ownership and control relates to the question of strategically

important resources (oil is a good example). The costs to the economy of a failure
of supply of such a resource may bear little relation to its current market price. So
that when a government lacks complete control over on important resource, par-
ticularly when it is imported, it may decide to reduce reliance on the resource by
developing alternative supplies; often at higher cost. Alternatively it may stock pile
the resources; ration its consumption or enter into long term agreements with
foreign suppliers.

An assessment of the security of supply, including an analysis of the risks of supply

interruption and on estimate of future world price levels coupled with an analysis of
the costs to the economy of such an interruption will help indicate the need to take
specific steps to safeguard supply or economise on its use.

3.4 Allocation
It now remains to decide how resources are made available to the road sector in
competition with other competing government and private users. This defines the
specific claim that the sector can make on national resources.

11
The usual government allocative system is based on:

(a) custom and historic trends;

(b) an impressionistic view of the economic rates of return;
(c) an assessment of the total resources available;
(d) political factors and in particular on the political value of the sectors policies
and programmes.

Most economists emphasise the role of economic rates of return in allocating

resources between and within sectors. The numerous practical problems of allo-
cation are nevertheless too difficult to be solved in this way. The use of economic
rates of return requires comparability between sectors. This is hardly ever possible,
so that the real problem of allocation reduces to allocating the available resources
amongst competing non-comparable activities. The problem of allocation is further-
more not only confined to the allocation between sectors. It is equally difficult to
know how to allocate resources within a single sector. For example, how should
they be allocated between inter-urban and rural or between current expenditure (eg
subsidies) and capital inveslment? The methods of appraisal used are usually quite
different and the distributional and other indirect effects make a direct comparison
of economic rates of return extremely difficult, Rates of return are nevertheless
important when the allocation is made, at least in an impressionistic way, but will
not necessarily 'define' the optimum allocation between sectors and schemes.

3.5 Constraints on Resource Use

In this section the term constraint refers to restrictions on freedom of choice which
are imposed on the sector by custom or by national (or international) policies and
regulations, over which the road sector has little direct influence or control. Con-
straints can be classified according to their basis of authority. This will give some
idea of the ease or difficulty of relaxing them should this prove desirable.

3.5.1 Statutory Enforced Regulations

Many constraints are enforced by statute. The various employment regulations and
legal minimum wages are examples. (See Chapter 4).

3.5.2 Standard Codes of Engineering Practice

Most governments subscribe to written codes of practice to be followed in
engineering work. These codes are not usually enforced by law, but do provide
guidelines to which many road planners feel obliged to conform. An engineer may
thus feel constrained to adopt standards which he feels to be too conservative in
their specifications. For example, the quality of materials specified for constructing
gravel roads, is often too high necessitating long (and expensive) journeys to
borrow pits. A lower standard of materials might be desirable in such cases but
would conflict with 'accepted' practice.

Particular care must be taken before any established code of practice is relaxed. If
possible, advice should be sought from an authoritative body before any substantial
deviation from accepted practise is implemented. (See Chapter 5).

3.5.3 Government Directives

There are many government directives relating to the road sector which must be
followed in preparing road schemes. The government may specify a set procedure
for the budgetary control of a scheme or may specify rules on how subcontracting
should take ptace. The scheme can often be completed at a lower price when
these directives are not followed. (See Chapter 4).

3.5.40rganisational and Institutional Constraints

Orgaeisations vary greatly in their ability to respond to demands placed upon them.
In addition to the parameters of size and disposable resources, internal structure,
experience, staff skills and qualifications and cultural background will all influence
an organisation's performance. (See Chapter 1).

12
3.5.5 Cultural Constra/nts
Cultural constraints have to be taken into account in the everyday decisions of the
road sector. Religious observance of holidays, diet or caste can present problems in
operating public transport. Likewise, differences in nationality, language and religion
can affect the efficiency and ability of a workforce to work together on a common
task.

3.5.6 Comments
It is clear that some constraints can be altered by the government departments
responsible for the road sector. To change other constraints may need the approval
of the whole government and may even require changes in international agree-
ments.

13
4 The Management and control of
road transport

4.1 Introduction
This chapter is concerned with the policies a government ought to adopt to help
manage the transport sector.

The government has a range of policy instruments it can bring to bear to influence
the efficiency and nature of its road transport. The most common are listed below:

Import duties and controls

Vehicle and fuel taxes
Road user taxes
Licences
Price controls
Subsidies
Highway regulations and policing
Investment policy
Control of public enterprises

It is desirable to take a coordinated view of all government policies affecting the

transpor~ sector. If policy instruments are selected and used without reference to
each other, or to overall transport policy, a serious loss of efficiency can result.
Policies may not only conflict, but many do so in a way that renders the overall
package of policies counter-productive.

The mobilisation of resources to meet consumer demands is either governed by

the price mechanism or by a variety of regulations and government directives. The
following sections concentrate on the use of price mechanism as a means control-
ling the use of resources.

The price mechanism often exhibits a number of deficiences in its ability to direct
and coordinate the flow of goods and services to those places where they are most
needed. The most notable deficiencies are that capital and imports tend to be
relatively undervalued in relation to unskilled labour which tends to be overvalued.
In addition, the market response to changes in relative prices may be slow because
of poor information and poor management; also, monopolistic practices may be
prevalent.

A prime objective of the transport planner in a market economy should be to

ensure that the consumer bears the total real cost of transport. This policy may be
modified, however, in the light of the government's distributional and other objec-
tives. As far as possible, taxes, duties and licences should thus be arranged to
bring market prices into line with real costs. A system of poorly organised licensing
and import control regulations will encourage inefficiency which will lead to an
unnecessarily high price to the consumer.

4.2 Import Duties and Controls

Many countries suffer from major balance-of-payments problems and for this
reason seek to control imports. However, there can be many other motives for
import controls. They can protect local industries, act as a revenue tax or form part
of a policy relating to international trade agreements, which may be subject to
bilateral or multilateral negotiation.

14
 It is important to recognise, however, that a badly organised system of quota
controls or import duties can undermine the efficiency of the transport sector. If
import duties on transport equipment are too high, then, with no home production,
an unnecessary shortage of transport services may result and this may have
adverse effects on the rest of the economy. Likewise, if different classes of
competitive transport equipment (such as railway wagons and lorries, or finished
vehicles and spare parts) have very different tariff levels, then inefficiencies can
arise as transport operators restrict their purchases of those items with high tariff
levels and increase their purchases of lower priced goods.

Some countries require importers to be issued with a licence before they can
import. This also restricts imports. The licence to import thus operates in the same
way as an import control. However, the operation of this policy is open to abuse
and can create more inefficiency than import duties alone. If only a specified
number of people can import transport equipment, it will probably restrict compe-
tition and encourage a high-priced, inefficient and monopolostic transport industry.

4.3 Vehicle and Fuel Taxes

Vehicle, fuel and tyre taxes often represent an important source of income to the
government. There is no real economic reason, however, why revenue from these
taxes should be equal to road sector expenditure in any given year. Many countries
l e w relatively high taxes on private motor transport since the tax is relatively easy
to collect and principally affects only the better off members of society.

The most appropriate taxation levels should be based on the long term cost of
providing specialised services and facilities to different types of user. When travel
demand is static or declining and assets require little more than periodic main-
tenance to keep them in order, this cost is equal to annual management and
maintenance expenses only (ie these are the only expenses that could be 'avoided'
by discontinuing use). However, when demand is expanding, or when major assets
have to be periodically replaced, this cost includes some capital expenses (which
now also become avoidable) in addition to the usual costs of management and
maintenance.

The consistent application of these rules enables the transport user to make a valid
comparison between the costs of road transport and other means of travel (such as
rail or canal), as well as between different spatial locations (for industry or other
forms of commercial activity).

Road user taxes should not only ensure that the al!ocation of traffic is optimal
between road transport and competitive modes but should also ensure that it is
optimal between different classes of road vehicle. Since the damaging effect of a
vehicle on a road surface is dependent on the vehicle's gross axle weight (and of
course on the pavement characteristics) the road maintenance cost associated with
the movement of a heavily overloaded truck could well be many hundred times
more than the road maintenance cost associated with the movement of a light van.
For this reason it is essential to regulate the use of heavy vehicles.

One obvious means of regulations is to tax heavy vehicles to a greater extent than
light vehicles, so that transport users take the extra cost of using heavy vehicles
into account in their everday decisions. This type of policy will nevertheless only be
effective if it is rigorously enforced.

4.4 Licensing
The objects of licensing are manifold. Four principal objectives are listed below:

(a) To collect annual vehicJe taxes;

(b) To improve safety;
(c) To control the quantity and quality of service offered;
(d) To control the size, nature and amount of competition provided by the road trans-
port industry.

15
The first two objectives are self-explanatory. Annual vehicle licences are an obvious
way of collecting vehicle taxes and vehicle statistics; they are also an effective way
of helping the police to follow up infringements of highway laws. Licences can also
ensure that both vehicles and drivers are road-worthy. Many countries subject their
vehicles to regular safety tests and ensure that drivers can pass a driving test
before any vehicle or driving licences are issued.

Licensing is also a common way of achieving the second and third objectives.
Many city and central government authorities demand that permission be obtained
to operate on a route, the bus operator must usually satisfy the authority that he
will run his buses in a safe manner. He may also be expected to operate at a
certain minimum frequency and charge fares at a specified level, By meeting these
obligations the operator may then be given the sole operating rights for that route.

Many people believe that only by restricting competition can a given level of safety
be achieved. It is feared, for example, that if competing bus companies operate on
the same route, buses might race one another to crowded bus stops to pick up
the most passengers and so cause unnecessary accidents and congestion in
crowded streets. It is also argued that greater coverage by regular bus services will
be obtained by insisting that operators applying to run the profitable inner town
routes should also agree to run the less profitable out-of-town services before they
are granted any operating rights.

Others feel that the safety argument is exaggerated and that restrictive licensing
can only encourage inefficiency. Restriction may encourage monopolistic practices
and this may lead to inefficiency and high fares. The licensing authority may then
have to control fares as well. However, once fares are controlled, it becomes
increasingly difficult to assess whether the bus company is providing a service
satisfactory to the public. The market mechanism then ceases to be a good indi-
cator of operating performance and this may lead to demands for higher fares, or
even subsidies, to enable operators to meet their service obligations.

Licensing can also be used to control the operations of the road haulage industry. It
may be used to encourage larger firms to take advantage of economies of scale or
to restrict competition within the industry and with other modes of transport.
Historically, competition was restricted for two principal reasons: (a) railways
suffered increasingly severe competition from the road haulage industry and
restrictions were introduced to assist the railways, (b) it is often believed that
fluctuations in economic activity cause a large number of vehicle operators to enter
the industry when demand is high only to get into financial difficulties when it
slackens. By restricting competition, it was believed that instability in the road
haulage industry would be lessened, thus enabling the industry to develop in a
more orderly and efficient fashion.

The restricted licensing of road haulage is one of many policies which has been
adopted to favour the railways. However, it can be argued that there are far more
effective methods of supporting railways (eg open subsidisation) if it is felt that
they should remain in operation. To operate licensing restrictions to protect rail-
ways can lead to considerable inefficiencies in road haulage.

The use of restrictive licensing to prevent instability will likewise encourage a

monopolistic road haulage industry which will be inefficient making the price to the
consumer higher than it need be. Licensing should thus be used with discretion
and should only attempt to control those things, eg safety standards, for which it is
suited,

4.5 Price Controls

Maximum price controls in transport are generally introduced to control mono-
polistic transport operators. Monopolistic practices in transport will tend to occur
for three reasons: (a) government legislation may prevent competition; (b) technical

16
indivisibilities (ie, substantial economies of scale) associated with a particular trans-
port mode may make competition very expensive and therefore impractical (for
example, the market will rarely be able to support more than one railway line
between two towns); and (c) a geographically isolated transport market may make
monopolistic collusion between transport operators easy. Prices may finally also be
controlled for social reasons.

Minimum price controls have been used by some countries in an effort to protect
the railways and the weaker sections of the road haulage industry. This type of
control is frequently criticised as ineffective because it is generally very easy for
transport operators to give hidden discounts.

Should a government decide that it is necessary to operate maximum price con-

trols, then it is important to ensure that enough revenue is available for effective
capital replacement, making full allowance for inflation. When fares are regulated to
prevent monopoly profits, no problem should arise. However, when they are
regulated for social reasons, there will usually be a shortfall between revenue and
expenditure (including depreciation). The government will then have to provide
subsidies to ensure that the financial viability of the firm is not undermined.

4.6 Subsidies
When a government decides that a transport service is in financial difficulties and is
worth preserving, payment of an open subsidy is very often the best way of
keeping the operation going. To put restrictions on alternative transport modes in
an attempt to achieve the same result will cause inefficiencies in the rest of the
transport sector and may not, in any case, guarantee the desired result.

A subsidy will ensure clearer political choices and will also point to possible inef-
ficiencies on the part of the transport service needing support. For example, a
railway in competiton with road transport may be in financial difficulties. Because
the railway goes through parts of the country which are not connected to the road
network the government may decide - for social reasons - to keep a particular
part of the rail network in being. A subsidy to the railway may therefore be agreed.
However, it is important to ensure that this subsidy does not encourage inef-
ficiency in the rest of the network. The subsidy should therefore be specific, and
care should be taken to investigate the transport service to ensure that the subsidy
is not used to keep other inefficient parts of the network open where the govern-
ment has no specific interest.

The government should carefully examine the long-term costs of any subsidy to
see whether the same objectives could be achieved more effectively in other ways
(eg increased mobility could be achieved by road building and road transport). This
is important since it is difficult, both politically and administratively, to withdraw a
subsidy once an agreement has been made. Subsidies are also open to the objec-
tion that the government must find taxation revenue from somewhere else to
enable them to pay the subsidy. The cost of raising this extra revenue, and its
effect on efficiency elsewhere, must be offset against the apparent benefits of the
subsidy.

4.7 Highway Regulations and Policing

A number of commonplace traffic regulations have a direct effect on the efficiency
of the transport sector. Common examples are parking restrictions, speed limits,
controls on vehicle movements and maximum axle loads. Obviously, bad parking
will restrict the flow of vehicles. Therefore a good parking policy can increase the
capacity of the road network in the same manner as investment in new road space.
Similarly, the intelligent use of one-way streets, mini-roundabouts and other traffic
management measures can also help to reduce journey times, cut transport costs,
as well as increasing the capacity of existing roads.

Besides increasing road capacity highway regulations and traffic management

measures may be used to restrict the numbers of vehicles entering a congested

17
urban centre. Extra vehicles added to a congested road will decrease the average
speed of all vehicles and increase the costs to other road users. In fact, consider-
able benefit can be gained in a congested situation if a small proportion of the
traffic is discouraged from using the urban road network. There are a variety of
ways of restricting the number of vehicles from entering urban centres including
parking controls, tolls and zone licences, and an improved provision of public trans-
port. These measures are discussed in greater detail in Chapter 6.

Like other measures, these traffic management and highway regulations should be
considered as part of an overall long term strategy and cannot be viewed in
isolation. For example; if traffic management measures are introduced on an ad
hoc basis in different parts of a city, regardless of their interactive effects, then the
total net effect on traffic flows could well be worse than before.

Besides introducing highway regulations, government bodies must ensure that

regulations are obeyed. This in general means effective policing. The government
must thus ensure that the police force is large enough and sufficiently well trained
to carry out the task of enforcement.

4,8 Investment Policy

The government's investment policy in the road sector must fit in with its overall
objectives in the whole of the economy. This is particularly true of the assumptions
relating to the distribution of economic activity and the forecast growth of traffic.
For example, a large waste of resources would be caused if an agreement was
made to embark on an investment programme in roads which was dependent on
high traffic growth rates if, at the same time, the government also intended to cut
back on fuel consumption and the import and production of motor vehicles.

4.9 Control of Public Enterprises

Most countries allow public and private transport undertakings to exist side by side.
The central government may own and directly run a transport organisation, or it
may significantly influence other transport bodies which are operated by local
authorities.

It is difficult for a government to decide how much control it should exercise over
transport concerns that are publicly owned, This is particularly true if the body
under its direct control competes with private operators. Many governments believe
it best not to interfere in the day-to-day running of a public enterprise; such
decisions are left to the appointed managers. Public bodies are usually as subject
to licensing regulations and company laws as any private operator. The principal
role the government plays is in agreeing future investments in the publicly-operated
company. In this case, profitability criteria are an important factor in determining
the level of investment in the public sector.

Other governments believe they should take a more interventionist approach. They
may do so for a number of reasons. They may wish to provide new competition to
an established operator who is exploiting his monopoly position in an undesirable
way. Alternatively, a government may decide that an extension of public ownership
would increase efficiency. For example, in a major town there may be many small
private bus companies that operate unsafely and that cannot gain the advantages
of a large unified bus operation. The government may therefore decide to take into
public ownership the bus services for the whole town.

There is a division of opinion on the extent to which an extension of public owner-

ship in the transport sector is desirable. However, there is'broad agreement that
public ownership in itself will not ensure efficiency and that an attempt at too much
detailed control of a public enterprise can well be detrimental to efficiency in the
long term. It is therefore important that all public companies should be given a clear
and well-thought-out framework of objectives to work towards. Such a set of
objectives will enable the management of these bodies to set their own objectives
and control their own activities in such a way as to meet the government's objec-
tives in the most efficient manner possible.

18
5 The identification of road
investment alternatives

5,1 Introduction
This chapter deals with the way in which policies and schemes are identified to enable
the government to meet its objectives. Having formulated its objectives, and having
established which resources are available for achieving them, the government
must consider which alternative courses of action will enable these objectives to
be realised.

Policy and scheme identification is a two-tiered activity. It starts with the identi-
fication of particular problem areas (ie unsatisfied objectives) and follows this with a
detailed statement of the possible courses of action capable of solving them. It
thus defines the 'problem' as well as the amount of effort (in terms of data, man-
power; etc) required to solve it.

There are at least four areas in which projects and policies might be identified:

(i) improvements in overall transport policy and management;

(ii) the improvement or extension of rural roads;
(iii) the improvement or extension of inter-urban roads;
(iv) the improvement or extension of urban roads.

The difference between a rural road and an inter-urban road is not clear cut since
in many situations a rural road will become an inter-urban road as traffic increases.
Nevertheless, it is worthwhile making the distinction from both an engineering
viewpoint and also from the fact that the appraisal methods that should be applied
are different. This chapter will therefore discuss the following alternatives within
each category and Chapter 6 will go into more detail on the different appraisal
methods:-

(a) methods of getting better use out of the existing transport infrastructure (eg
improvements in management)
(b) the possibility of encouraging the utilization of different modes of transport;
(c) the possibility of using different means of communication (eg telephones, closed
circuit TV);
(d) the staged implementation of plans and policies
(e) alternative design standards and routes (geometric standards as well as material
specifications);
(f) labour-intensive versus capital-intensive methods of doing things.

If all the above factors are considered, and are qualified with reference to the
resources and constraints involved, a fairly extensive list of clearly defined possi-
bilities should be identified tabulating all the known options available for achieving
the sector's stated objectives.

This chapter will thus focus on the issues that should be considered either when
assessing the merits of a feasibility study, or, more significantly, when deciding on
terms of reference for a feasibility study, in many cases the terms of reference
used for a study have been so restrictive as to allow only a very limited number of
alternatives to be studied which very often results in overinvestment. It is often
beneficial to carry out a pre-feasibility study to screen a large number of invest-
ment possibilities so that terms of reference for the detailed feasibility study can be
drafted to cover a practical number of realistic alternatives.

19
5.2 Improvement in Overall Transport Policy and Management
Before considering investment alternatives to improve the transport system in
rural, inter-urban and urban areas, it is essential to consider the more general
options in the areas of policy and organisation which do not require investment.

These general options are discussed in some detail in Chapter 4. They include such
items as taxation - eg import duties, fuel tax, annual licensing costs - and in the
case of transport regulation such items as - import controls, highway regulations,
and controls in the allocation of vehicle licensing. There is also the possibility of
nationalisation or of some other form of government ownership or control.

There are other non-investment alternatives specific to the rural, inter-urban and
urban areas which are discussed in the following sections, but it is important that
consideration be given to these overall options.

5.3 The Improvement ofthe Rural Road Network

Roads in rural areas generally handle very low volumes of traffic and pass through
fairly sparsely populated areas of country. Their main purpose is usually to provide
access to natural resources (eg minerals, agriculture, forestry, tourist resources etc)
and to provide access for the rural population so that they can more easily reach
hospitals, schools, regional market towns etc.

Prior to the decision to improve existing rural roads or build new ones, it is import-
ant to consider options both outside the direct area of transport and also within it.

As far as the former is concerned, the possibility of concentrating populations in

larger villages might be considered, so as to provide them with cheaper sources,
not only in the transport field, but also in respect of water supply, electricity, health,
education services etc. Additionally, if raw materials have to be processed, it may
be cheaper to relocate the processing plant so as to reduce transport costs. A
further possibility that should be considered is to encourage suitable crops and pro-
vide better storage facilities so that produce can be stored during the rainy season
when roads may be impassable, to be transported when the weather and the roads
improve.

Turning now to options within the transport sector: the possibility of meeting trans-
port demand by alternative modes (for example ropeways or water borne transport)
may be worth investigating. In any consideration of transport improvements it is
important to think of the road and the vehicle as a system. Thus the existing spec-
trum of vehicles should not always be taken as given, since it may be possible to
restrict the choice of vehicles using a road in such a way as to reduce construction
costs and also total transport costs (eg construction plus maintenance plus vehicle
operating costs).

Thus within the rural road sector, consideration should be given as to whether a
road should be designed to carry motorised vehicles. In many cases a careful
examination of the cost of transporting goods by head loading or track animals may
indicate that a motorised road is not essential and a cheaper track to carry, say,
animal drawn vehicles may be a better alternative. Whether this is a practical alter-
native or not, it is unrealistic to assume that the construction of motorised roads in
these circumstances will result in all goods and people being carried by motorised
vehicles. A careful analysis of how the people in the area make decisions as to their
preferred mode of travel should be carried out.

5.3.1 IdentificationofProjectsforDetailedStudy
A distinction should be made between improving the existing network and building
new roads. Improvements are usually of two main kinds: direct improvement of
the all-weather road surface (sometimes of the alignment as well) and structures;
and upgrading the road to an all-weather standard. The first will clearly reduce the
cost of operating vehicles over the road, while the second permits all year round

20
use. The latter improvement has benefits that are often difficult to quantify.
Seasonal roads are usually adequate for the evacuation of most agricultural pro-
ducts, but can increase costs when they affect timber and mineral products.
Seasonal roads also have undesirable social effects in that they sometimes leave
some areas of the country without access for several months on end.

New roads in rural areas are usually justified in terms of natural resources. Land-
use maps - or other information about the nature and extent of a region's natural
resources - are used to identify which new roads would contribute to the develop-
ment of these resources. Once such roads have been identified, however, a more
thorough regional study is usually required to decide whether these roads, together
with any other complementary investments, are justified in terms of their overall
effect.

New roads may also be justified on social grounds. They provide access to remote
regions and this clearly benefits the central administration (facilitates tax collection,
maintenance of law and order, etc) as well as the local populace who can now
travel more easily to regional centres.

Chapter 6 draws a distinction between appraisal methods for rural, inter-urban and
urban roads and discusses the detailed appraisal methods. The demand for roads is
usually far in excess of that which any government can fulfil and it is therefore
impractical to subject every possible improvement in the rural road network to a
detailed economic and social appraisal. What is required is a relatively coarse
screening process which will reduce the number of schemes to manageable pro-
portions.

The screening process must be cheap and quick and it will therefore depend, to a
very large extent, on the type of data that is readily available. Aerial photography
and satellite imagery are often useful tools for obtaining coarse data for this type of
approach. In rural areas the benefits to roads go beyond the savings in vehicle
operating costs considered for inter-urban roads. On the economic side such factors
as the potential land for cultivation, soil fertility, mineral resources and forestry
should be considered. Account should also be taken of such factors as, population
served by the road, improved accessibility and (possibly) political sensitivity of the
area. These factors can then be used Lo order projects iEterms of relative import-
ance one to another. When deciding what factors should be used, not only should
data availability be considered but also consideration must be given to the reason
for building the road (ie What are the precise objectives of a particular rural road
investment?).

Although one must accept that many rural roads will continue to be improved and
built on the expectation that the road is the major constraint to rural development, it
should be borne in mind that the evidence to support this expectation is somewhat
tenuous and what is generally required is a package of investments and policies in
sectors other than the road sector, in order to obtain the maximum return from
investment. Thus, wherever possible, rural roads should be considered to be only
one part of an integrated rural development scheme.

Having decided that investment to improve or build new roads is the best solution,
different ways of designing and contructing them need to be investigated.

5.3.2 Design Standards

In most of the richer countries of the world, roads are classified into various
categories on the basis of their function and the amount of traffic they carry. For
each category geometric 'design standards' are set and in addition, guidelines are
given as to the quality and quantity of the various engineering materials that may
be used for the construction of the road. The geometric standards tend to be based
on permitting safe operation at a designated design speed for the road.

Design Speed - The choice of 'design speed' is generally a matter of judgement

and depends principally upon the nature of the terrain, the extend of man-made

21
features, the expected levels of traffic and the costs and benefits associated with
these factors.

The 'design speed' adopted directly dictates such design features as curvature
superelevation and sight distance. Other factors used as the widths of pavement
and shoulders and the side clearance to walls and rails are not directly related to
'design speed', but they do affect vehicle speeds, and higher standards are appro-
priate where higher 'design speeds' are required.

For rural roads in mountainous terrain a design speed of as low as 25 kph may be
appropriate, whereas for flat or rolling terrain 5 0 - 6 0 kph may be more suitable.

Road Width - The 'right of way' required for road construction is the reserve width
required not only to construct the road in the first instance, but also to allow for
expansion to meet any future increase in traffic. The width required will also
depend upon such features as the type of drainage and the need to provide room
for road maintenance and for the installation of services such as electricity, water
and telephones. For rural roads the 'right of way' may be of the order of 20 metres.

The 'formation width' is the width of carriageway plus the shoulders of the road
and this width is dependent on the category of the road (urban, inter-urban, rural)
the design speed, the expected volume of traffic and the safety standards. For two
way rural roads carriageway widths can be as low as 5.5 metres, and the formation
width as low as 6.5 metres, although these can be increased to 6 - 7 metres and
9 - 1 2 metres depending upon the category of rural road and the type of terrain. It
should also be borne in mind that where traffic levels are very low, single carriage-
ways with passing points may be adequate, with carriageway widths of 3.5 metres
and formation widths of 5 metres.

Such other design standards as maximum gradient, maximum length of gradients,

superelevation sight distances and minimum radii of curvature, are all functions of
the design speeds and are discussed in detail in 'Low cost roads', (Odier et al) and
in 'A policy on geometric, Design of rural Highways' (American Association of State
Highway Officials). See Bibliography.

All the above standards have cost implications and combine to offer a certain 'level
of service'. The cost implications of a high level of service, are very significant
but societies in the wealthier countries have indicated their willingness to pay this
price even though it may not be the most economical way of satisfying a transport
need. Similarly, engineering specifications in the richer countries have implicitly or
explicitly within them considerations regarding the risk of failure. Because of their
relative wealth, richer countries tend to invest in such a way as to minimise this
risk of failure often at a high cost.

Many developing countries have produced their own design standards and specifi-
cations. Given the relative economic wealth of these countries, serious consider-
ation must be given as to whether these standards (to satisfy such things as 'level
of service' and 'risk of failure') are appropriate The general tendency in both rich
and poor countries, is to overdesign roads (in terms of quantifiable economic
benefits).

Great care should be taken over the use of standards and consideration should be
given to the real or implied costs and benefits of applying them. (Indeed the same
can be said of the richer countries.) What is required, therefore, is that the standard
of road to be built, should be determined by considering the costs and benefits of
provision as they relate to different design standards and specification.

Rural roads tend to be constructed to either earth or gravel standards, although in

some cases a bituminous surface of some sort might be used. Because traffic
flows are generally low, they should usually be designed so as to fit in with the
topography, thus reducing earthworks to a minimum. However, high geometric

22
standards are frequently set for such roads (more particularly gravel roads) and in
many types of terrain these standards will result in considerable extra costs. In
these circumstances, an assessment should be made of the cost savings that will
result from a lowering of horizontal and vertical standards. Again, these same
standards can dictate the width of the road in which case they will generally specify
them as two lane roads. In many cases, a two-lane road may be unnecessary since
traffic delays and the potential number of accidents may be so low that a single
lane road with passing places is practicable.

It is often considered that rural roads should provide access all the year round.
Earlier in this chapter it was suggested that by providing storage facilities, it may be
possible to allow for a road to be closed during some part of the rainy season.
Lorries with heaw axle loads cause considerable damage to rural roads especially
in the wet season and can cause the road to be impassable very quickly. In these
circumstances, it may be sensible to temporarily close the road (by the erection of
barriers) so as to reduce the damage to the road surface.

Specifications of the type and grading for gravel to be used in road construction are
sometimes given. Acquiring material to meet these specifications can mean very
expensive transport costs in hauling material from many miles away. Investigations
should be carried out to determine whether materials closer to the road which may
be below the normal specification, can be used either as they are (implying higher
failure risk) or modified in some way so that they can withstand the predicted
traffic loading. The testing of these alternative materials will itself incur cost and
may mean that construction will be delayed but the cost savings could well exceed
the cost of testing and delay.

Consideration should be given to the possibility of using 'stage construction'

methods. If a road is being designed to serve for a 20 year period with traffic
beginning at a modest level and only later reaching sizeable volumes, it is wasteful
to provide road width, pavement strength or bridge capacity too much in excess of
immediate need. Stage construction is a way of delaying investment in those parts
of the final form of the works, that can be conveniently and economically delayed,
and in the meantime getting a return on the funds not utilised by investing them in
another project~ However, from the point of view of engineering practicability, there
is a limit to the number of stages that can be incorporated in any one project.

For rural roads it is often considered worthwhile to build the road initially to its final
horizontal alignment and most of it to its final vertical alignment (but some improve-
ments to the latter, such as those involving heaw earthworks, may be deferred
until there is a considerable increase in traffic). This approach is always worth con-
sidering but where traffic flows are low initially, and where it is predicted that the
growth in traffic may not be high, it is quite possible that the best solution may be
to build a cheap road with low geometric standards initially, and then build an
almost entirely new road, say, ten to fifteen years later when traffic levels justify it.

Bridges and structures should be considered very much within the context of stage
construction. Firstly the question should be asked whether a bridge or structure is
needed at all. Drifts or fords may be adequate for many water crossings and large
rivers may be crossed by ferries. If a bridge is deemed necessary, consideration
should be given to building it in two stages and this may dictate the concept of the
design adopted. A single lane bridge can be expanded when traffic growth dictates
by adding on extra width of decking on abutments constructed with this in mind at
the outset, or by duplicating the complete structure (usually a more expensive
alternative).

The height of the bridge deck above bed level, should also be considered. Con-
struction costs can be reduced by building a low level deck and accepting a higher
risk of flooding, but if this choice is made the risk of damage to the structure by
floodwater and debris needs to be assessed. Similar considerations apply to the
choice of the width of flood opening that should be provided.

23
5.3.3 Maintenance
There are a limited amount of data available on the basis of which desirable main-
tenance inputs may be estimated for developing countries in relation to the type of
road construction and the traffic which is forecast. There is a need however for
more detailed study, particularly in respect of the gravel and earth surfaces which
are most likely to be adopted for rural roads. However, some idea may be formed
of the cost of maintaining a road as well as that of operating vehicles on it, related
to its future condition. Thus the total transport cost of a road project may be
estimated at the planning stage.

For an earth or gravel road, maintenance expenditure equivalent to 10% or more of

the total transport cost might well be justified. The most effective routine task is
the checking and clearing or repairing of drainage facilities. Under tropical conditions
failure of the drainage system will rapidly lead to severe damage to the road. It is
also important to fill pot-holes and restore the cambered shape of the carriageway,
so that it may be kept as dry as possible. In the case of roads carrying only very
light traffic, it is unlikely that more than minimal road maintenance (normally entail-
ing reshaping of the carriageway at least once a year) can be justified. Such roads
are liable to be damaged to a disproportionate extent by the passage of heaw axle
loads, particularly in wet weather. Although it is unlikely to be practicable to enforce
special vehicle load limits on earth or gravel roads, a low standard of alignment and
uneven running surface will generally discourage use by the heavier vehicles.

The active role of maintenance is not merely to preserve the roadway but to retain
the running sur[ace in a condition which will permit vehicles to operate at that level
of cost at which the total transport cost will be lowest. This maintenance may be
achieved manually and such an approach offers the advantages of the reliability of
self-sufficiency and a minimum of import costs. At higher traffic levels, the require-
ment for pavement maintenance will increase and tend to make mechanical tech-
niques increasingly economic. Routine maintenance of a gravel surface may be
carried out with a broom or other suitable form of drag.

5.3,4 Choice of Construction Methods

There are always options available under this heading as to whether roads should
be constructed by labour-intensive or plant intensive techniques or by contract or
direct labour.

Over the years more and more roads have been built using capital intensive tech-
niques. There are several good reasons for so doing. The most important being that
roads built using existing labour intensive methods are more expensive (at market
prices) than those which concentrate on the use of plant. Additionally there is
generally a bias towards the use of plant by engineers who prefer to use 'modern'
methods as a consquence of training in formal educational institutions which are
influenced by the needs of the industrially developed countries. Again, the financial
conditions surrounding the process of competitive bidding for contracts can often
mean that the smaller firms (ie those more likely to employ labour intensive
methods) do not have the financial status to qualify for tendering. Finally there is
often a problem associated with current foreign aid programmes. When aid is tied
the import content (usually plant in the case of road construction) is also tied which
has resulted in emphasis being placed on capital intensive methods of construction.

In recent years the concern over widespread unemployment and underemploy-

ment, has resulted in an increased interest in labour intensive methods.

Some tentative conclusions from the work of IBRD and ILO carried out so far, are
as follows:--

(i) Labour intensive methods are technically feasible for a wide range of con-
struction activities and can generally produce a comparable quality of produce
as plant intensive methods.
(ii) Labour intensive methods, as they exist, cannot generally compete economically
with plant intensive methods.

24
(iii) However labour productivity can be improved considerably by introducing
appropriate organisational, management and mechanical improvements. With
this improved productivity, labour intensive methods can be fully competitive with
plant intensive methods for wages under US$1.00 per day (1976 prices). For
wages greater than US$2.00 per day labour intensive methods are unlikely to
be justified and between US$1.00 and US$2.00 the economic viability
will depend upon various factors 1. Of course these break-even wages would
change with the price of plant or fuel.
(iv) It is possible that the available equipment may represent the practical limit
of intermediate technologies and the prospect of any new intermediate tech-
nologies is not clear.
(v) The availability of an adequate labour supply is a significant factor.

Labour requirements for road construction are specific in time and location and it is
not sufficient to have an aggregate stock of surplus labour in a region. The required
flow of labour at the construction site is the relevant consideration.

For rural roads it is often considered that labour-intensive methods of construction,

using labour from the immediate vicinity of the site, are more appropriate than they
would be for inter-urban or urban roads. However, as pointed out above, consider-
ation must be given to the availability of labour since there is often e shortage of
labour during the peak harvesting and planting seasons which may well conflict
with the timing of the construction programme. There is also the problem that the
productivity of such locally employed unskilled labour is considerably lower than the
productivity of groups of specialised workers who are employed for one specific
purpose and who travel from site to site.

An advantage from involving members of the local community in the construction

of a road may arise through having established local commitment and expertise to
undertake maintenance of 1fie road.

5.4 The Improvement of the Inter-Urban Road Network

Inter-urban roads connect together the main centres of population. The flow of
traffic is usually quite heaw and a reasonably durable road pavement is generally
required.

The main justification for improvement is based on cost. The cost of improvement,
usually in the form of a physical improvement (eg improved road surface and/or
alignment) is offset by a reduction in vehicle operating costs. Options outside the
transport sector, such as changes in land-use patterns are generally much more
limited in this area than they are for either rural or urban roads, and environmental
factors except for such things as wildlife and ecology, can generally be ignored.
Within the transport sector, consideration should be given to alternative modes of
transport, such as rail and air (and possibly water borne transport). In the case of
inter-urban roads, it is much more difficult to control the type of vehicle using the
road than it is for rural roads, however, the control of axle loads is an extremely
important issue.

It is widely recognised that the damaging effect of vehicles, increases dispropor-

tionately to increased axle loading. Indeed, studies indicate that if the load on an
individual axle is doubled in magnitude the damaging affect is fifteen times as
great.

1 Wages in this case may be interpretedeither as the marketwage (includingany allowances

for housing,transport etc) if these reflect the real economiccost of employing labour, or as
the opportunity cost of labour if distortions exist on the labour market. Howeverin cases
where the market wage is abovethe break-evenwage for labour intensiveconstruction,but
the opportunity cost of labouris lower, there are special problems with the implementation
of labour intensive methods.

25
Many countries have adopted (often rather arbitrarily) maximum legal axle loads.
Unfortunately these limits are below the loads which would give operators maxi-
mum return on the use of many commercial vehicles. The enforcement of such
limits is a difficult matter. It requires relatively expensive equipment operated by
reliable officers of authority who are supported by suitable legislation.

5.4.1 The Identification of Projects for Detailed Study

At the coarsest level and as a first step to identifying potential new inter-urban
roads, a map of existing population distribution is useful. If possible it might be
amended to incorporate projected natural movements of population in the future
and government objectives relating to the ideal distribution of population. The
identification of new inter-urban roads might then start by indicating which trans-
port links (though not necessarily roads) would enable:

(a) all active centres of population to be connected to each other (net necessarily
directly, but via a main travel network of some kind);
(b) all the main administrative centres (eg provincial and county government head-
quarters) to be connected to the areas under their control;
(c) all active centres of population to be connected, even if indirectly, to all major
ports, airports and international border crossings.

This process will lead to the identification of a skeleton transport corridor network.
However, the number of new roads (or other transport facilities) proposed will
usually exceed the resources available and a certain amount of coarse sieving will
be required to identify which projects are more worthy of serious consideration.
This sieving, or screening, will usually be fairly crude. They must therefore be used
with some discretion to ensure that reasonable projects are not excluded from
further consideration.

For improvements to inter-urban roads the screening process tends to be easier

than that for rural or urban roads. This is because the justification for investment is
usually confined to considerations simply of the cost of the road construction and
maintenance and the savings in vehicle operating costs.

The procedures for identifying this type of project are well established and usually
rely on physical engineering criteria, such as measures of road 'capacity' or
'sufficiency', or on economic criteria utilising the concept of a rate of return on
capital expenditure. The former procedures, although quite common, are not
recommended. The rate of return procedures are more satisfactory and usually
take the form of generalised graphs of total transport costs or of marginal rates of
return (similar to the first year rate of return). This concept is illustrated in Fig 6.1.

General information on vehicle operating costs, road maintenance expenditure etc

is used to prepare - for each type of existing road - a graph of total transport
costs for different levels of annual average daily traffic (of a given vehicle compo-
sition). These define the road standard that will minimise the cost of carrying a
given volume of traffic. These curves are then used in conjunction with general
estimates of traffic volume to identify possible improvements requiring further
study. They are clearly too general to produce firm conclusions, but will generally
indicate where the broad priorities should lie and will usually enable several
hundred possible schemes to be reduced to 50 or so 'reasonable' ones requiring
further study.

5.4.2 Design Standards

As for rural roads (see 5.3.2) it is essential to look critically at the design standards
and specifications which are often given. A considerable amount of money is being
spent on providing a high 'level of service' and a low risk of premature deterioration,
and given the scarcity of resources, it is at least questionable whether money
should be spent in this way.

26
 Total transport cost (ie. construction + maintenance + vehicle operating cost)

Sand-clay sub grade

(a) 18ft bituminous surfaced (3Oft
formation) unstabilized°new road
.== (b) 18ft bituminous surfaced (3Oft
E formation) unstabilized minimum,
from prepared earth (3Oft formation)
(e) Existing earth (24ft formation),
partially maintained
=. >, (d) Existing earth (24ft formation),
0 t-
fully maintained
C 0.

d
I I I I I
0 50 100 200 300 400
Vehicles per day

(a) 18ft bituminous surfaced (3Oft

D formation) stabilized-new road
(b) 18ft bituminous surfaced (3Oft
.__= formation) stabilized-minimum
E from prepared gravel road
(c) Existing gravel road (24ft formation)
partially maintained
(d) Existing gravel road (24ft formation)
i fully maintained
J
!

I I I I I
50 100 200 300 400
Vehicles per day

Fig. 6.1 SCREENING CURVES (BASED ON T O T A L T R A N S P O R T COSTS) USED TO DECIDE

W H E T H E R AN EXISTING E A R T H R O A D JUSTIFIES I M P R O V E M E N T

Inter-urban roads are most commonly surfaced with some type of bituminuous
material, or in concrete, although 'engineered' gravel roads are not unusual. There
is the possibility that the setting of design standards and specifications has more
legitimacy in this sector than in the rural sector since consistency of geometric
design throughout the country might be considered desirable on the grounds of
road safety and the provision of a consistent level of service. However, this con-
sistency can only be achieved at a cost and if set design standards are considered
necessary, it would be preferable to select different standards depending on the
terrain, the construction costs, and the amount of traffic the road will carry.

27
Inter-urban roads may be classified into either primary or secondary roads and the
geometric standards appropriate will depend upon the same factors that were
discussed in section 5.3.2, on design standards for rural roads, and which are
expanded upon in 'Low cost roads' and in 'A policy on geometric design of rural
highways (see Bibliography). Some examples of the sort of standards that might be
appropriate are given below, but the considerations discussed in 5.3.2 and above
should be borne in mind before applying them directly.

Design Speeds - For secondary roads in mountainous areas speeds as low as 35

kph can be considered and these speeds may be permitted to go as high as 80 kph
in flat or rolling terrain. Primary roads in mountainous terrain can have design
speeds in the area of 4 0 - 5 5 kph whereas for flat terrain they may rise to as much
as 100 kph.

Road Width - 'Right of Way' widths of 30 metres and 50 metres are probably of
the right order for single two lane secondary and primary roads, with formation
widths of as low as 8 metres for secondary roads in mountainous terrain varying to
13 metres for primary roads in flat or rolling terrain are appropriate. Carriage widths
will be within the range 6 - 7 . 5 metres depending on the road classification and the
terrain.

Engineering standards as to type and thickness of materials used in the construc-

tion of a pavement also merit critical appraisal. These standards have often been
dictated by experience in the richer countries, where the types of road building
material enshrined in the specifications are readily available at a reasonable cost.
Locally available materials which may not satisfy conventional specifications, may
be perfectly adequate, or may respond to treatment by such processes as soil
stabilisation, so as to produce a satisfactory road. In many cases it may be appro-
priate to use sub-standard or marginal materials and to accept the possibility of a
higher risk of serious structural deterioration or fracture. However, it should be
emphasised that, as mentioned earlier, structural failure in developing countries is
often attributable to excessive axle loads which considerably reduce the life of a
pavement.

The thickness of the pavement required to meet a forecast volume of traffic is

dependent on the strength of the natural ground or sub-grade over which the
pavement is laid. Weak sub-grades require thicker, more costly pavements than
stronger ones, but there are a number of techniques such as compaction, drainage,
consolidation, import of selected fill etc, that can be used on weak ground as alter-
natives to thicker pavements. In extreme cases, however, such measures may be
required simply to establish a stable platform on which to build the road and they
can require a considerable time to take effect. In such cases therefore, some work
is required well in advance of the construction of the pavement and this is a factor
which needs to be considered when making planning decisions.

In the case of inter-urban roads, stage construction in the form of designing the
road initially to its final geometric standards, is always something to be considered.
Similarly the possibilities of widening the pavement as traffic demand grows,
should be investigated, As regards pavement construction, initial levels of traffic
may be such as to justify only a relatively thin pavement with a surface dressing.
When traffic increases the pavement may be strengthened by the addition of a pre-
mixed bituminous material.

One consideration that may not be of great importance for rural roads, but which
becomes more important when considering inter-urban roads, is that of safety.
Design standards are often set with considerations of safety in mind. By relaxing
standards by too great an extent may lead to an increase in accidents. Accident
data needs to be collected to assess the magnitude of this problem.

Generally the alternatives to bridge construction, such as fords or ferries, are not so
relevant to inter-urban roads as they are to rural roads because of the higher level

28
of traffic. There are however, situations when a ford or ferry would be the best
solution in the short term. Bridges should be constructed initialy to meet the
demands of traffic and safety at minimum cost but with provision being made for
widening at a later date. The height of a bridge and its flood opening should depend
(as for rural road bridges) upon the probability of flooding and the disbenefits to
closing the road.

5.4.3 Maintenance
As for earth and gravel roads, the maintenance of bituminous surfaced L1 roads is
an extremely important factor (and is often neglected) in minimising the total
transport costs. Adequate drainage, to ensure that water is not allowed to damage
the surface, base or sub-base, is of prime importance since damage to the struc-
ture of the pavement is expensive to correct.

Bituminous surfacing can be of three different types:--

(i) 'Surface dressing', bywhich a film of bitumen or bitumen emulsion is dressed

with stone chippings.
(ii) 'Slurry seal' - which is a suspension of mineral fines in bituminous emulsion
laid cold.
(iii) Bituminous premix - which embraces a range of mixtures of bitumen, stone
and mineral fines, generally mixed and laid hot. It should be laid to a thickness
of at least 35 mm and preferably 50 mm.

The chief purposes of bituminous maintenance are t o : -

(a) provide smooth riding conditions

(b) protect pavement layers and sub-grade against loss of strength through water
penetration
(c) reduce evaporation, which can cause damage by soil shrinkage
(d) protect base material from impact or abrasion
(e) in the case of bituminous premix, strengthen the pavement.

The provision of a smooth riding surface is very important for relatively heaw
trafficked bituminous roads, since the vehicle operating costs (which form by far
the largest proportion of the total transport cost) are mainly dependent on the riding
quality of the surface. The term 'smooth riding surface' should not be taken to
apply to the texture of the surface. If the texture is smooth then, in wet conditions,
the friction between the tyres and the road surface is seriously reduced and can
result in the vehicles literally floating on a film of water (aquaplaning). For safety
reasons, therefore, it is important to ensure that the texture of the surface is
irregular.

It follows that the cost of adequate road maintenance as a proportion of total

transport cost, is generally less than the 10% figure quoted (5.3.3) for earth and
gravel roads. This should not however reduce its importance since the lack of
adequate maintenance can result in the need to reconstruct the entire pavement at
considerable cost.

The assessment of the need for maintenance is still, to a large extent, a matter of
personal judgement but there is still an obvious need to establish recognised
standards.

5.4.4 Choice of Construction Methods

The general points made in the corresponding section on rural roads apply equally
well here. It is however worth re-emphasising that labour intensive methods of
construction are not necessarily more relevant to rural roads than they are to inter-
urban roads. The results of the studies so far would suggest that the technical

L1 The overwhelming rnajorib/ of paved roads in developing countries are surfaced with
bituminous material althoughconcrete roadsdo exist.

29
feasibility of providing a road of the same quality has been established, although
some reservations must be made concerning compaction and pre-mixed bitumi-
nous surfacing - a modification to the design specification could help to overcome
this problem. If labour is employed for the duration of the project, the problems of
labour shortage during peak planting and harvesting time (encountered in the rural
areas) are less and the productivity of the labour is likely to be much higher.

5,5 The Improvement of Urban Transport

5.5.1 Land Use Transportation Planning
The complexity of the issues involved in urabn transport are such that in a docu-
ment of this nature, one can only indicate the major issues and alternatives. The
interaction between transport and almost every aspect of urban life has meant that
roads should not be considered in isolation. For this reason it is common for both
land-use and transport to be considered together resulting in a Land-Use Trans-
portation Study (LUTS). There are two major reservations about the application of
methods derived from the urban environments of the richer countries and applied
to cities in the developing world.

The first concerns the political and administrative structure and its ability to imple-
ment the proposed solutions to the urban problems. Inevitably in such a complex
environment the number of local and national institutions involved are enormous
and unless the responsibility and funds are invested mainly in one powerful body,
the conflicting interests of each individual institution tends to ensure that very few
of the study conclusions can be implemented and reports are left to gather dust on
shelves. Even in the richer countries, where central and local government have
been reorganised to meet the complexities of planning, the record of implemen-
tation is poor. The terms of reference for such studies must ensure that the
solutions are so framed as to take account of the constraints within the political and
administrative structure.

The second reservation concerns the more technical aspects of the studies. In
order to develop the sophisticated models used in the richer countries, a consider-
able amount of basic data was required and this is seldom available in developing
cities. Further, predicting the socio-economic changes in the cities of the develop-
ing world is much more difficult than prediction for the cities in the richer countries.
For example, the sophisticated models require information on the population and its
distribution within a city over a twenty or twenty-five year period. Rural to urban
migration took place many years ago in the developed countries and there are
unlikely to be vast movements of population from rural to urban living or vice-versa.
In the developing world urban migration is still taking place and it is often difficult to
predict the population of the larger countries (never mind its distribution) to within
say, one million, over a twenty-five year period. Given this uncertainty, the deri-
vation and application of expensive, sophisticated models is seldom justified for
long term planning. Simpler and more flexible models are required.

Urban roads generally carry fairly heaw traffic flows and pass through built-up
areas where land values are high and where traffic nuisance is least desirable. The
cost of building or improving roads is extremely high and the land required for new
roads is very costly and will usually involve the demolition of existing buildings. B y
concentrating traffic on these roads, the problems associated with such factors as
noise levels, pollution and community severence are usually increased. For these
reasons it is very important to look for alternatives to road construction or improve-
ment in urban areas.

Unlike the rural and inter-urban sector it is generally not practicable to meet the
demands of the population to travel by the mode they would prefer and at a time
they prefer. The demand for travel can be altered by considering land-use and
transport as a unified system. Thus, for example, one can locate or relocate shop-
ping centres, business and industrial centres, airports, residential areas and other
major generators of traffic, so as to minimise the demand for transport. There is
also the possibility of altering the timing of the demand. Most cities have a particu-
lar problem in the morning and evening peak hours, when people are travelling to

30
and from work and it is common practice to design projects so as to meet peak
hour demand. Peak hour demand can be reduced by altering the hours that people
start and finish work. In many cities flexible working hours have been introduced
which has helped to spread the peak travel demand.

5.5.2 TrafficManagement
Since the costs of major projects, such as new road networks and rapid transit
systems, are both extremely expensive and can be environmentally very damaging,
it is essential that every effort be made to make maximum use of the existing
transport facilities. In this context it is worth noting that the benefits to major infra-
structure investments are usually estimated from a comparison of travel costs on
the existing network (the do-nothing situation), with costs on the proposed net-
work. If this comparison is made using, as the do-nothing situation, the existing
poorly organised and managed network, then major infrastructure investments may
appear to be justified. However, if the do-nothing situation is defined as that
situation in which the traffic management solutions, suggested in this section, have
been investigated and implemented so as to make the best use of the existing
faciilities, then it may well be that the major investments proposed have no
economic viability. It is therefore important that, when appraising land-use trans-
portation studies or individual major investment projects in urban areas, the essen-
tial first step is to investigate the optimal use of the existing network and to use
this as a base for investment appraisal.

In the richer countries there are many tried and efficient methods of increasing road
capacity, such as one way systems, traffic lights (independent, linked and con-
trolled by computer on an area wide basis), bus lanes, road markings, junction
design, channelisation etc. Care should be taken in applying these techniques, as
the traffic flow data (particularly with respect to vehicle composition) on which
these are based are often inappropriate in the environment of developing countries,

The majority of cities in developing cbuntries use other forms of transport besides
cars, taxis, buses and lorries. Journeys by pedestrians are often more important
than they are in cities of the developed world and have been sadly neglected in
most studies. Most of the developing cities have some form of, what is often
termed, intermediate forms of public transport, such as bejaks, jeepneys, mammy
wagons, 'service' taxis etc which have grown naturally out of their environment.
They meet a very necessary demand but their use often limits the carrying capacity
of the road network and for this reason, traffic planners often feel a need to restrict
their use. In some cases it may be beneficial to do so, but there is insufficient
evidence available to justify the elimination of these types of vehicles, and what is
required, in each particular case, is a study of the costs and benefits of these forms
of intermediate public transport.

Over the last few years there have been attempts to increase the passenger
carrying capacity of the urban network by attempting to persuade car drivers and
passengers to use the public transport system. Bus lanes of various types have
been introduced, including contra-fiow lanes and bus-only routes, and priority can
be allocated to buses at traffic lights. These techniques, while increasing the
journey speed of buses, do not appear to have had much effect on persuading car
drivers to give up the use of their vehicles.

There are other ways of reducing private car use. The most common method being
control over the number of parking places allowed and there is no doubt that these
controls do considerably influence the drivers choice as to whether to use his car or
to travel by public transporL It is not the ideal solution since government is seldom
in a position to control every parking space in urban areas. Those with, say, private
parking places at their place of work will not be restrained and restrictions on
parking can cause increased congestion due to drivers driving round and round the
restricted area looking for a parking place. Probably a much better way of restrain-
ing car use is by area licensing. A cordon can be placed around the city centre and
those who wish to use the road space have to pay a fee on entering the restricted

31
zone. The limited evidence so far would suggest that this is the most efficient
method of restraining traffic but it is an extremely sensitive political issue and can
be hard to implement since enforcement is often a major problem.

It is very common to find stalls and markets on either side of the road, or on the
roads themselves. This obviously restricts traffic capacity. However, this is not to
say that they should be banned. They usually form a natural part of the social
heritage and the social and economic costs of losing them must be weighed
against the benefits to increased capacity and speed of traffic.

As was suggested earlier in the brief discussion on land-use transportation studies,

pedestrians tend to be sorely neglected in urban areas. Attempts to increase the
carrying capacity of the road system often create havoc for the pedestrian making it
difficult to cross the roads, and can result in increased accidents unless serious
consideration is given to their needs. Accidents in the cities of the developing world
are very high compared to most cities in the richer countries and there is a need to
pay more attention to this problem.

This brief section on urban roads has inevitably mentioned only a few of the issues
involved and has emphasised the importance of making the maximum use of the
existing facilities. It should be borne in mind however, that traffic management
improvements should not be carried out on an ad hoc basis and each improvement
should be framed within the context of a longer term planning solution.

32
6 Framework for project appraisal

6.1 Introduction
Having identified alternative solutions and having screened out those projects
which are not realistic options, it is now necessary to turn to the problems of
detailed appraisal methods. The diversity of problems and possible solutions makes
it impossible, in such a brief summary, to establish firm ground for each and every
situation and only brief ment!on of the important concepts can be made.

In the Introduction (Chapter 1) it was pointed out that, although cost-benefit

analysis can be of use in albcating resources between the main sectors of the
economy, such as power, irrigation and water supply, education etc, the different
methodologies used in each sector mean that it is only an extremely crude tool for
this purpose. Similar comments can equally be applied when one is faced with the
problem of allocation of resources between rural, inter-urban and urban roads. The
objectives of building these different types of road result in different appraisal
methods and, although cost-benefit analysis is much more relevant to the problems
of intra-sectoral allocation of resources than it is for allocation between the main
sectors, it can only be used as an aid. A brief discussion of the different approaches
to appraisal follows.

6.1.1 Rural Roads

They represent the grass roots of the road network and are the primary collectors
of traffic in rural areas. They are generally short in length, have low traffic volumes
and are constructed of earth or engineered gravel.

Many developing countries are experiencing increasing pressure from their agri-
cultural populations for rural road development. However the benefits from rural
roads are varied and diverse. Greater passenger traffic appears to be one of the
most characteristic changes following rural road investment. This may mean more
migration to urban areas as well as more frequent shopping trips or visits to
relations. Attendance at school and medical clinics may also be increased with
easier mobility.

Ideally rural roads should be considered as one of the many inputs that are required
to promote rural development as discussed later in this section. However there are
very many cases where this integrated approach is impractical in the short run, for
political, administrative or financial reason and where it is necessary to attempt to
relate benefits to specific investments. Because of the low traffic levels it will
usually be extremely difficult to justify investment on the basis of savings on
vehicle operating costs to existing traffic. Benefits can be estimated by combining
the benefits to existing (or normal) traffic with either an assessment of the benefits
to new traffic which the road generates or with estimates of the increased agri-
cultural production resulting from the investment. Given the imperfections of the
market in rural areas this latter approach is advocated, u Even this approach
acknowledges that it is usually inadvisable to attempt to associate benefits
exclusively to the road investment and that some other inputs are likely to be
required to promote development.

LI For a more detailed discussion of the problems see 'The Economic Analysis of Rural
Road Projects', World Bank Staff Paper No 241, August 1976.

33
In areas of predominantly subsistence agriculture, rural roads should ideally be
planned as part of an integrated development package. Their job is to minimise the
total transport and distribution costs of moving all goods and people in the project
area. This includes not only the directly agricultural productive components but also
people moving for social purposes, for shopping trips and trips to school and to
health centres.

Where there is a very low level of economic activity and no development project is
planned, then the criterion of minimum transport costs may well suggest a very
poor provision of rural road infrastructure giving the very poor levels of accessibility.
In such cases certain arbitrarily defined minimum standards of accessibility may
well be deemed necessary for purely social, medical and administrative needs.

This would be expressed in terms such that no par of the country should be more
than a given travel time to major town or alternatively it could be expressed (as in
India) such that no village of a given population should be more than a given
distance from a road of given quality.

6.1.2 Inter-Urban Roads

These roads generally carry relatively high traffic flows and their role is mainly to
carry goods and people over relatively long distances. It is not usually the prime aim
of such roads to promote rural development. In this situation the majority of bene-
fits are likely to stem from savings in vehicle operating costs to normal traffic and
traffic generated by the road will not be such an important factor as it is for rural
roads.

One of the reasons for advocating an appraisal method for rural roads which
focusses on the agricultural sector is that, by doing so, one will be able to identify
the beneficiaries of investment. Similarly for inter-urban roads it is important that
the analysis should be taken further than simply assessing the aggregate benefit to
the investment, to include a study as to how this aggregate benefit is likely to be
distributed between various sections of the community.

6.1.3 Urban Roads

The relationship between road building and economic and social benefits is much
more complex in the urban environment than in the inter-urben situation. This is
firstly because a relatively large part of the benefits from urban road investment is
in the form of passenger time savings from the relief of congestion, in contrast to
the benefits from inter-urban road investment where vehicle operating cost savings
form a much larger part of the benefits. Secondly, the greater proximity of roads
and traffic to people's housing, places of work, shopping, recreation and schooling,
inevitably means that the environmental effects of transport, such as noise, fumes
and accidents, play a larger part in urban road planning than in the inter-urban case.

Because of the greater range of choices available to solve urban traffic problems (see
Chapter 5) and because of the complex repercussions on the urban environment,
urban road planning must be closely integrated with overall urban planning. It is
also necessary that political and administrative bodies responsible for urban traffic
management should be involved in any decision affecting new urban roads.

A cost-benefit appraisal of an urban road scheme will compare the investment

costs of the scheme with the measurable benefits. Because of the difficulty of
measuring and evaluating passenger time savings, reduced accidents, less noise,
etc, it should be recognised that urban road appraisal is a very crude tool of
analysis.

This chapter focusses on cost-benefit analysis as the tool for appraisal and by
definition cost benefit analysis can only deal with factors that can be quantified in
monetary terms. There is a growing awareness that social objectives should be
given more weight visa vis strictly economic objectives and from the foregoing
discussion it is clear that this is particularly relevant especially for rural and urban
roads. Ideally these social and political objectives should be incorporated within the

34
appraisal method and various 'ranking methods', which weight individual social and
economic criteria, have been developed. However any 'ranking' method inevitably
involves value judgements as to the relative importance of such things as health
and education and great care is required in its application.

Fundamentally investment appraisal is concerned with three broad issues:

(i) Forecasting the effects of the proposed investment.
(ii) The net benefit of these effects ie the extent to which the changes that will
take place as a result of investment fulfil the objectives of government policies.
(iii) How should these benefits be compared with costs so as to make decision
making as rational as possible given the constraints of the method of analysis.

These broad issues are considered in more detail below.

6.2 Forecasting the Effects ofthe Proposed Investment

The forecasting process is an essential requirement for rational transport planning.
Forecasts are needed of the likely demands to be placed on the roads sector and of
the effects of particular changes to the road sector. Unfortunately prediction is
always a hazardous and difficult process and the results are rarely wholly accurate.
The intrinsic problems are compounded in developing countries by the lack of
r~liable data and the rapid rate of social and economic change. The development of
a suitable base of reliable transport planning statistics has been generally neglected
and should receive priority if the accuracy of forecasting and thus transport plan-
ning is to be improved.

The type and detail of the forecast required is dependent upon the purpose for
which the forecast will be used. The techniques employed must be tailored to suit
the degree of detail and the level of accuracy required. The consequences of some
national policy decisions (eg raising fuel taxes) can be efficiently forecast by refer-
ence to global figures like annual vehicle mileage and the average response to price
changes. Other decisions need more elaborate detail such as the existing and likely
future traffic flows along a given stretch of road and the responsiveness of this
traffic to changes in a variety of variables (eg speed, cost, etc). In such circum-
stances it will be necessary for the transport planner to forecast the effects of
these changes not only along the given stretch of road but also upon competing
routes or modes of transport. This detail and the disaggregation of flow changes
into normal growth and growth caused by the road change itself is essential for the
accurate estimation of the net benefit of the change. If distributional objectives are
important to overall Government policy the traffic planner will have to foreast the
effect of the changes upon particular groups or areas. The forecasting stage must
therefore bear in mind appraisals needs and thus government objectives.

In many situations the transport planner will be able to use the present traffic flows
as a base for forecasting. The effects of the proposed changes can thus be esti-
mated upon this 'effective' declared level of demand. There may be certain circum-
stances however where there is no effective demand to guide the transport
planner. It must not be assumed that this situation will necessarily continue ad
infinitum. For example when there are no bus services in an area an origin-
destination survey will record no bus passengers. If this survey is used as the fore-
casting base no bus passengers will ever be forecast. To be wholly accurate and to
provide the essential information required for policy purposes the forecasts of
'effective' demand (based upon the survey) should be accompanied by an estimate
of the 'latent' demand for bus services. This 'latent' demand represents the
journeys that people would like to make but cannot for want of suitable transport
facilities.

The techniques of forecasting range from the extrapolation of past trends, through
the use of simple functional relationships to the complete mathematical modelling
of complex transport networks. Each technique has its uses but all can be very
misleading in the hands of either inexperienced or uncritical planners. The extra-
polation of past trends is a relatively straight forward exercise and can be reason-
ably accurate in the short-term. It can also be very dangerous and misleading if

35
recent trends are assumed to remain constant for an extended time period. Mathe-
matical modelling will provide sophisticated estimates of travel demand on detailed
networks. It is, however, an expensive and time consuming exercise which is often
inappropriate to the situation of developing countries. To these reservations must
be added the lack of data and rapid rate of change in developing countries which
may result in either incorrect relationships being estimated or the coefficients of
the relationships being unstable over time. It is fundamental to the forecasting
exercise that the complexity of the techniques should not exceed the quality of the
data and the functional relationships involved. The limitations of the techniques and
the data should be made explicit so that policy decisions are not made upon
spuriously accurate forecasts. It may often be necessary to test the stability of
policy decisions to different forecasts of the effects arising out of specific changes.

6.3 Estimation of the Net Benefits from changes to the Road Sector
The techniques used for the estimation of the net benefits will depend upon the
type of change proposed. Some techniques will be appropriate to one situation
while other techniques will be necessary in other situations, There are, however,
ceri:ain fairly simple concepts and principles which are crucial to the correct esti-
mation of net benefits. If the appraisal fails to take these into account, serious
misallocations of resources are possible.

6.3.1 Comparabilityandmeasurability
The effects of changes to the road sector are likely to be various and may affect
different aspects of the government's social and political objectives. It should be
the aim of the planner to give the decision maker as clear a presentation of these
effects as is possible. Some effects may be quantifiable in monetary terms, while
others may only be measurable in physical terms. There may also be effects which
are impossible to measure in any units. The planner should recognise explicitly the
difficulties of quantification and comparability which will often make the precise
estimation of net benefits impossible. As much quantification, as can be seriously
considered, should be carried out so that the decision maker can make reasoned
trade-offs. If there are intangible costs and benefits the planner should set them
out, in as much detail as possible, together with the reasons for believing that they
will materialise as a direct result of the change rather than for any other reason. For
all costs and benefits there must be a clear distinction between the 'potential' and
the 'actually likely' and where possible, some form of monitoring should be under-
taken to establish exactly what does happen. While this may not enable the change
to be reversed it will clarify the actual results and aid in the appraisal of future,
similar proposals.

6.3.2 Double-Counting
It is possible that during the forecasting process the same effect may be predicted
in several forms. To avoid double counting all effects should be carefully scrutinized
to ensure that they are indeed separate effects and not merely manifestations of
the same effect. For example reduced transpor~ costs should not be included
together with increased land values. The former causes the latter so that their
addition will effectively multiply the correct measure of benefit by two. While
double counting is to be avoided the different aspects of the same effect may help
to show the distributional effects of the change.

6.3.3 Interdependence
Changes to the road sector are often interdependent with respect to other
schemes (ie the benefits of the scheme are dependent on whether or not, and in
what form, another scheme is implemented!. This can happen within a sector,
between sectors or between different periods of time. These effects can be either
positive or negative and are often not recognised or are ignored to simplify the
analysis. This, together with the danger of counting the same effects for both
schemes, can be extremely misleading and should be avoided. It cannot be over-
emphasised that the transpor~ sector cannot be planned in isolation from the rest of
the economy.

36
6.3.4 Net Benefits
The transport planner is concerned to estimate the net benefits of changes to the
road sector. Careful consideration must be given to whether the benefits from the
change are not balanced by increased costs to others. Similarly, the planner is
concerned to estimate the net value of increased production rather than its gross
value. While the positive effects of road changes may be very apparent the losses
may be spread over wide areas and thus much less visible.

6.3.5 Social rather than IndividualCosts and Benefits

The social value of a change to the road sector may differ significantly from the
apparent value of the change to individuals. The financial costs and benefits to
individuals may be an inaccurate reflection of the true social value. As a conse-
quence the costs and prices used to estimate the net social benefit may be
different from those used to forecast the effects of the change. The costs and
prices used for forecasting are those to which the road user reacts. These
'perceived' costs are extremely important indictors for many planning purposes.
Indeed, a knowledge of these costs and the way in which road users react to them,
coupled with the ability to vary them, can provide an efficient method of regulating
the effective demand for transport services. These perceived costs may not reflect
the true economic value of the resources employed and thus certain adjustments
will have to be made.

(a) Indirect taxation and other transfer payments. As a general rule such transfer
payments should be excluded from the estimate of net benefits. A saving in fuel
tax to road users is mirrored by a fall in government revenue and no real costs are
saved. Transfers are not real costs but only a mechanism for transferring income
from one group to another. If, however, distributional objectives are important to
government policy then explicit attention should be given to the magnitude and
direction of such transfers.

(b) Shadow prices: in developing countries the distortions within the economy may
be such that market prices poorly reflect social costs. The social cost of an item is
the value of output foregone by using the item for one purpose rather than
another - its opportunity cost. The actual market price may, however, be deter-
mined by government regulation. Such distortions are commonly found in the
markets for labour and foreign exchange and to use market prices for these items
will obscure the social costs of employing these resources. Adjustment can be
made through using a system of shadow prices so that the real social worth of a
project is revealed. The use of shadow prices in road planning should be guided by
their use elsewhere in the planning system.

(c) Escapable costs: when determining the net value of projects it is essential that
careful consideration be given to whether the costs involved can in fact be avoided.
If the resources involved can be resold then there is an immediately escapable cost
ie there is an alternative use. Similarly other costs can be immediately avoided if
the activity is stopped or reduced, fuel costs are a common example. Other
resources may be specific to one use and can only be avoided when the decision
to replace them is made. Certain other costs cannot be avoided by discontinuing
their use and are inescapable in all circumstances - they are sunk costs. Earth-
works are an example of such costs as they are specialized facilities with more or
less infinite lives if adequately maintained and have no obvious resale value. Few
costs can be saved by discontinuing their use and once built they are, in economic
terms, a free good.

When the change involves the replacement of one facility by another it is essential
the planner examines which of the costs involved can really be saved by discon-
tinuing the use of the existing facility. If all costs are assumed escapable there may
be considerable overestimation of the benefits of the project.

(d) Distribution - most governments have definite views about the way they
would like to see the benefits and costs of a change to the road sector distributed
between individuals and regions. The social value of a change to the road sector

37
must be estimated with these distributional objectives in mind. The policy maker
may decide to establish a system by which the costs to different groups or areas
can be weighted so that the planner can estimate the net social benefit. Otherwise
the planner must attempt to disaggregate the costs and benefits in such a way that
the distributional implications of the change are made clear to the policy maker.

(e) Comparison of realistic alternatives - to estimate the net social benefit from a
change to the road sector the predicted new situation must be compared to a 'do
nothing' situation. It is necessary that realistic alternatives are compared, otherwise
more information may be concealed than made plain. For instance the replacement
of a seasonal earth road by a paved road may yield considerable benefits in respect
of increased agricultural production and some transport cost savings. The increased
production may however be forthcoming from the construction of an all weather
road rather than a paved all weather road. In the appraisal the season road should
be compared to the minimum cost all weather road and then this should be
compared with the paved road. Not only does the planner need to estimate the
total net benefit of the change but also the net benefit of each incremental change
within the total change.

(f) Direct and indirect effects - many of the costs and benefits of changes to the
road sector are direct and clearly identifiable with the change eg construction costs,
changes in transport and maintenance costs, changes in noise levels. Other effects
are more indirect, such as increased production, and care must be taken to elimi-
nate double counting. In some circumstances even more indirect effects may be
ascribed to the change, effects which come about through linkages within the rest
of the economy. A major expansion in road construction might stimulate the
establishment of industries supplying the raw materials. Similarly the monetary
benefits from the project and the wages during construction may stimulate further
rounds of spending. While such effects may occur they should be handled with
extreme care. The decision maker will need to know why such effects will take
place because of investment in the road sector rather than any other sector. In
many cases these ven/indirect effects are excluded from the analysis as it is
assumed that they apply equally to any investment. This may not be completely
valid but provides a useful first working approximation.

6.3.6 Risk and Uncertainty

The problems of forecasting and appraisal have been stressed at several points. It
is inadvisable to only consider single values for many of the important planning
variables. The advisability of undertaking the proposed change may have to be
appraised within a range of possible values in order to test the robustness of the
planning decision, The more irreversible the decision the greater the need for such
'sensitivity' analysis.

6.4 Comparison of Costs and Benefits

The planner must attempt to provide the decision maker with the information
necessary for rational choice. The decision maker will be faced with the following
types of problems.

(i) Is the proposed change viable?

(ii) Which of the proposed solutions to a particular problem should be chosen?
(iii) How should projects be ranked in order of importance?
(iv) When should the changes take place?

This latter question of timing is of course a most important one when consideration
is given to the first three problems. It is mentioned as a specific item so as to
emphasise its importance, since it is so often neglected. The important consider-
ation is when the investment should be made so as to achieve the optimal solution.
The question is also important when considering the best solution to a particular
problem or when attempting to rank projects.

38
In developing countries, even more than in developed countries, there are serious
conceptual and statistical difficulties in forecasting social costs and benefits in
situations where social and economic change is rapid. There is also growing aware-
ness that economic efficiency criteria, viewed simplistically, should not be the sole
justification for government action and investment. Income distribution, health,
welfare and educational facilities, personal mobility, political integration, security
etc are all important considerations for the decision maker.

It is therefore, in general, neither possible nor necessary to be too sophisticated

when making estimates of costs and benefits nor is it necessary to use very
complex criteria for decision making. In most cases, what is required are simple
criteria which, although not perfect, will reduce the errors in the allocation of funds.
Considering the problems of measurement and comparability it should be
recognised that one set of criteria may not be sufficient for all possible changes to
the road sector. As a consequence, it may be necessary for criteria to be developed
to deal individually with urban, inter-urban and rural roads.

39
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